CFTC Calls for Default Judgment Against Ooki DAO in Ongoing Lawsuit

A judge ruled last month the agency had properly served the DAO after two token holders were served with the lawsuit.

AccessTimeIconJan 12, 2023 at 4:38 a.m. UTC
Updated Jan 12, 2023 at 3:43 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The U.S. Commodity Futures Trading Commission (CFTC) is asking a federal judge to rule that a decentralized autonomous organization (DAO) violated federal commodities laws after it failed to respond to an ongoing lawsuit.

The CFTC, which sued Ooki DAO last year on charges of running an unregistered crypto futures trading facility and failing to conduct proper know-your-customer checks, argued in a filing Wednesday that the date for the DAO to respond – Jan. 10, 2023 – had come and gone, and said the court should enter a default judgment against the group.

"On December 20, 2022, the Court deemed service on the Ooki DAO of the Complaint and Summons in this action complete as of that date," the filing said. "Pursuant to Rule 12(a)(1)(A)(i), the Ooki DAO’s answer or other responsive pleading to the Complaint was due on or before January 10, 2023. ... The Ooki DAO failed to answer or otherwise defend as instructed by the Summons and as provided by the Rules."

Ooki DAO, a successor to a company called bZeroX, allegedly allowed U.S. persons to trade illicit crypto derivatives products. The CFTC settled charges with bZeroX and its founders, Tom Bean and Kyle Kistner, in September and attempted to sue the entire DAO at the same time. The lawsuit was served by way of a chat bot and a forum message.

Various groups of attorneys and companies in the crypto industry pushed back, arguing that a DAO cannot be treated like a person and the CFTC should have to identify the token holders behind Ooki DAO rather than serve the DAO as a whole.

While Judge William Orrick, of the U.S. District Court for the Northern District of California, initially said the CFTC should try and serve at least one token holder, he said in a Dec. 20 ruling that serving Bean and Kistner – who were still, apparently, token holders – met this requirement, despite the previous CFTC settlement and a statement from their attorney saying they had no role in the DAO.

"In this case, requiring the CFTC to serve some individual known Token Holders even after the DAO received actual notice is a belt-and-suspenders procedure to ensure that the due process requirements are met," Orrick wrote. "... The CFTC has utilized all of the information reasonably at its disposal to serve Ooki DAO, and it is clear that Ooki DAO has actual notice. Service was proper and complied with due process requirements."

The judge also pointed to "national media coverage" and the fact there were four friend-of-the-court briefs as evidence that, most likely, Ooki DAO as an entity is aware of the lawsuit against it.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.